Finally, an up week for us and the markets. We were up 1.5% and are now up 1.3% for 2014. The DOW was up 2.4% and NASDAQ was down 2.4%. For the year, the DOW is down 1.0% and NASDAQ is down 1.9%

No earnings last week and a slow news week.

Some of our stocks are just stupid cheap—compared to their net cash on hand per share divided by their stock price.

Check this list:

GRVY

172%

CCUR

31%

SIGM

62%

MRVC

24%

SYNC

52%

BLIN, DAEG, GRVY and CBEY can still be bought.

Last week we went 9 stocks up, 4 down and 1 unchanged. Since inception we are now 66 stocks up and 18 down for a 78.6% winning percentage (80% is our target win %).

Since our beginning, we have closed out the following positions:

2006-NTCT +44%

2006-ONXS +11% (Buyout offer)

2006-DTLK +41%

2006-CAW +21% (Buyout offer)

2007-IYXI.ob +44% (Buyout offer)

2007-MOBI +47% (Buyout offer)

2007-INFT +11% (Buyout offer)

2007-RITT +62%

2007-MIVA +55%

2007-DTLK +25% (2 weeks)

2007-PDLI + 3%

2007-QADI +25%

2007-CIMT +50%

2007-BDR +19%

2007-LINN.ob -57% (mortgage business bust didn’t help here)

2007-TISA -39% (take some tax loss for 2007 due to disappointing results.

2008-ANGN +26%

2008-OPTO.ob +40% (Buy-out offer)

2008-PDLI +9% (company split, and special dividend)

2008-BDAY -39% (long overdue takeover offer-or “take-under”)

2008-DTLK +40% (third trip on this one)

2008-ILOG +26% (Buy-out offer from IBM)

2008-PARL +56%

2009-MBRK +67%

2009-SNWL +14%

2009-CYNO +25%

2009-DTLK +33% (fourth trip on this)

2009-NED +46%

2009-CUTR +13%

2009-HSTM +67% (continued good earnings)

2009-RNWK +36%

2009-OPK +116%

2009-CLZR -32% (a loser even on a buy-out)

2009-DTLK +28% (our 5th profitable trip on this one)

2010-HPOL +110%

2010-DIVX +25%

2010-CHRD +37% Buyout (2 weeks after we recommended it)

2010-HPOL +30%

2010-MGIC +82%

2010-GSL +78%

2010-CCEL +49%

2010-HPOL +27% (third trip)

2010-CAW EVEN (excluding 2.5 years of dividends)

2011-DWCH +116%

2011-IPAS +15%

2011-PRM +56% Buyout (1 week after we recommended it)

2011-RST +12%

2011-NINE -10%

2012-BVSN +30%

2012-TISA +137%

2012-PTIX -44%

2012-MTSL +157%

2012-LTUS -98% No more Chinese stocks for us

2012-AEZS -63% a bad speculation.

2012-RIMG -46% (including dividends)

2012-HPOL +34% (4th trip)-bought out in 2013

2012-MEDW +133% (Buyout 1 week AFTER we sold this)

2012-SPNC +118%

2012-RWWI +1%

2012-MOTR -29% (lost biggest customer contract)

2013-INUV -83% Held this since 2007. Failed business model.

2013-ASTX-+40%

2013-MGCD-+79%

2013-LXK +2%

2013-AGYS +41%

2013-DRIV+31%

2013-EXTR +63%

2013-MITL +183%

2013-QADA +51%

2014-AVNW-28%

The model portfolio assumes $10,000 invested in each stock (unless we double-up–then it is $20,000), less $10 commission each way (TD Ameritrade rate).

For the 68 stocks that we closed out since 2006 (57 were winners) the average net gain was 34%

United Online Inc. (NASDAQ-UNTD)-Recommended 3/12/2014)

Buy Price $10.28

Valuation $27.86

Closed up $1.08 at $11.95

UP 16%

Synacor Inc. (NASDAQ-SYNC)-Recommended 12/17/2013)

Buy Price $2.56

Valuation $6.67 (Was $6.39)

Closed up $.02 at $2.55

Earnings announced on March 5, 2014. They did what they said they were going to do-revenue of $29.4 million, which was still down from $32.2 million last year. They made $.01 per share versus $.03 last year (GAAP basis). Gross margin held steady at 46% and cash per share was $1.32—50% of the current market price. Our valuation rose to $6.67. All in all, a good quarter. But—their guidance for next quarter and year was not so great. Next quarter they are projecting revenue of $24-$25 million and an adjusted EBITDA loss of $.7 to $1.2 million and for 2014, revenue of $100-$105 million and positive adjusted EBITDA of $2 to $5 million. Based on their 2014 year guidance, our valuation would fall to about $5.94 a share—still more than double the current price. Offsetting this, is that they are booting our their CEO and looking for a new one, and they instituted a $5 million share repurchase plan. We will change this one to a HOLD for now. No panic, just a wait and see attitude for a while.

Down 1%. HOLD

Dex Media Inc. (NASDAQ-DXM)-Recommended 5/10/2013)

Buy Price $15.14

Valuation $34.36 ( Was $31.50, $24.25)

Closed down $.58 at $7.74

Earnings announced on March 13, 2014. Things seem to be moving on track. Pro-forma revenues were $513 million for the quarter and $2.184 billion for the year. Adjusted EBITDA was $207 million for the quarter and $866 million for the year. Using our 3.5X EBITDA less net debt gives us a valuation of $34.36. Net debt was $2.519 billion. As far as we can see they are still on track with their 12/6/2012 pre-merger projections, other than digital sales did not grow as predicted. They forecast $2.33 billion in revenue, $2.681 billion in net debt and $865 million of adjusted EBITDA for 2013. We will continue to hold as we have seen other value plays like Pitney Bowes ($11 to $24) and Lexmark ($21 to $35) come back from panic situations.

Paulson & Co, filed a Form 13D on 5/10/2013 disclosing a 10.9% stake. They have held this stake since before the bankruptcy and merger. Then on May 14th, they filed a 13D/A disclosing another 350,000 share buy at prices up to $17.07 bringing their stake to 13%.

Down 49% HOLD

XRS Inc. (NASDAQ-XRSC)-Recommended 2/26/2013)

Buy Price $1.50

Valuation $5.57 (Was $6.71, $6.16, $6.79, $6.50)

Closed up $.06 at $2.61

Earnings announced on February 6, 2014. So-so. Revenue fell to $13.3 million from $14.2 last year, gross margin fell a bit to 59% from 63% and Non-GAAP net income fell from $2.2 million to $1.9 million. Mobile revenues were up 14%. Our valuation fell on the sales decline to $5.57—still more than 3X the current selling price. This is a company in transition and we are will to wait to see if they can turn it around.

From their last press release:

“Fiscal 2014 will be a year of significant transition for the Company as we begin the migration of our legacy customers to the XRS mobile solution. As we transition from our legacy hardware-based solutions to our no upfront cost mobile solutions, we expect soft overall revenue. We expect accelerating mobile revenue growth with consistent margins and will continue to invest in the further development of the XRS mobile solution with key integrations to strategic third-party providers thereby creating a whole product that will position us to capitalize on this expanding market.”

UP 74%, HOLD

Daegis Inc. (NASDAQ-DAEG)-Recommended 11/30/2012)

Buy Price $1.09 (Was $1.20 before we doubled up)

Valuation $3.25 (Was $3.25, $3.42, $4.64, $4.86, $4.00)

Closed down $.07 at $1.25

Earnings were reported on 2/25/2014. YOY comparisons were not good. Sales fell to $7.9 million from $10.4 million and adjusted EBITDA fell to $1 million from $1.8 million last year. Net debt decreased a bit to $11.3 million from $11.6 million last quarter, and is down about $2.4 million from last year. This is the first quarter in a while where sales did not decline from the previous quarter.. Our valuation stabilized and rose a bit to $3.25 per share-still a lot higher than the current trading price.

Norm Pessin filed a 13D on November 27, 2013 disclosing a 6.2% stake and upped it to 12.2% in December 2013. Good news that someone else sees the value here.

Kurt Jensen a 10% owner continues to sell stock at almost any price, putting a lid on DAEG. He still has 1.6 million shares, so this could take a while. .

Up 15%, BUY

Bridgeline Digital Inc. (NASDAQ-BLIN)-Recommended 8/24/2012)

Buy Price $1.17 ($1.24 before 2/14/2014 $10,000 adder)

Valuation $1.83 (Was $1.61, $2.19, $2.35, $2.56, $2.24)

Closed unchanged at $.97

BLIN announced a private placement of 3.2 million shares priced at $.95 a share in April. A little more dilution, but gives them some running room to grow.

BLIN reported the long awaited “big sale” on March 4th, which was a $7 million contract. The stock soared from about $.90 to $1.30, only to give it almost all back by the end of the day on 3.9 million shares. We think this was day traders playing with the stock and still like BLIN long term.

Earnings announced February 14, 2014. Revenues were $6.5 million up from $6.2 million last year. This is the first time in a long time that the YOY comparison was positive. Revenue from their legacy business was only $387,000. Recurring revenue doubled from last year to $1.6 million. They reported a $777,000 loss for the quarter. Adjusted EBITDA was $20,000.

For FY 2014 they are projecting revenue of $28 million and positive adjusted EBITDA (compared to a loss of $700,000 in 2013). Our valuation fell a tad to $1.74 a share.

We really like BLIN and think that just their recurring revenue stream of $6.4 million is worth the current $20 million market cap.

Down 22%, BUY

Telecommunications Systems Inc. (NASDAQ-TSYS)-Recommended 6/14/2012)

Buy Price- $1.37

Valuation $5.32 (Was $6.81, $6.28, $4.89, $6.02, $6.72, $5.49)

Closed up $.06 at $2.55

Earnings announced on January 30, 2014. Hmmm. Revenues were down to $79 million from $133 million last year. “Adjusted net income” was $.02 a share compared to $.20 last year. Gross margin was up to 40% from 37% last quarter and 31% last year. Our valuation fell to $5.32, still more than double the current price. Lower margin government revenues were down over 50%.

AVI Partners filed a Form 13D on March 26th disclosing a 5.1% stake in CBEY. They say they are unhappy with the company performance. Maybe this will help speed up the “strategic alternative” process that CBEY said might take an “extended period”.

Earnings announced 3/13/2014. Sales fell to $111.5 from $118.9 last year, and they lost $4.9 million. Our valuation rose a bit to $26.21. No news on the “strategic alternatives” review, just that it might take a long time. For 2014 they guided lower again. They expect revenue of $410 to $430 million and adjusted EBITDA of $50 to $65 million and free cash flow of $5-$15 million. Based on this tepid guidance, our valuation for 2014 would be $24.68-still more than 3 times the current price.

Revenues were up 19% to $50.7 million and their pre-tax loss declined to $174,000 from $3,104,000 last year. Net cash per share was $3.16 and our valuation jumped to $30.43 a share. Since their business is seasonal as they say in their press release, We will call their valuation $25.50 based on their 12 month results. They say they are continuing to invest in the business and that these should become apparent in 2014. Patience.

Lloyd Miller disclosed a 6.9% stake in February 2012.

Raging Capital bought another 1.6 million shares in the first week of December 2012 at $10.80 bringing their holdings to 20.1% of the company.

4th quarter earnings announced 4/9/2014. Another dismal quarter. Revenues were $38.5 million down from $44.2 million last year. They reported a $4.5 million Non-GAAP loss for Q4 compared to income of $3.3 million last year. Margins were good at 57% and net cash rose to $2.59 a share from $2.55 last quarter, but this was largely due to delayed payments at the end of the quarter. Their guidance for Q1 2015 was dismal also. Revenues expected to be $35-$38 million and an operating loss of around $4-$8 million. The only positive thing we could see was that they basically agreed that they could be at a $60 million run rate and the end of Q4 2014. At that level, assuming margins and expenses stay about the same, they would be very profitable. It is a long time to wait for some decent performance. Our valuation fell to $9.16 per share, up from the $8.24 last year.

Ariel Investments filed a 13G on January 10, 2014 disclosing a 10.1% stake in Sigma.

The CEO bought 343,000 shares back from Potomac Capital in December 2013 leaving Potomac with only 465,000 shares of SIGM. The interesting part was that the CEO paid $5.50 a share or about $1 over its trading price. Either a great expression of confidence in SIGM or a small price to pay to get rid of an activist investor. Since we don’t know which it is, or both we will stay a hold on this for now.

Earnings announced on January 28, 2014. Good again. Revenues increased 7.5% to $17.8 million and they made $.12 a share compared to $.08 last year. Cash was $25.1 million or about $2.78 a share and our valuation rose to $15.10 a share up from $14.33 a share last year.

We have collected $.60 in dividends so far (excluding the $.50 special dividend which reduced our basis).

Earnings announced on November 29th for the quarter ended September 30, 2013. Revenues were $12.1 million versus $14 million last year and $11.4 million last quarter and they lost $1.7 million. Net cash rose to $46.7 from $45.2 million or $1.69 per share. Our valuation rose a tad to $3.18 per share.

Lots of product introduction updates in their press release, but not much has been translating to the financials. Looks like they lost their licensee in China and are looking for a new one and they canceled the Korean version of Ragnarok 2, although the English version is still available. Revenues were up a bit as was cash, but unless the company decides to distribute some of that excess cash (like $1.00 a share) this is going to be a long wait.

Q2 earnings announced 3/6/2013. Revenues were up 9% to $8.1 million from $7.5 million last year, gross margin was 79% and they lost $461,000 compared to income of $4,000 last year. This quarter included a $234,000 restructuring charge that should cut annual costs by $2.5 million Recurring revenues were 95% of total revenues. They say in the press release that they are investing more in sales and marketing this year, but still expect to achieve higher EBITDA than last year. Q2 revenues were essentially flat with Q1. If they don’t get some revenue traction soon, we don’t expect to see much share price appreciation. Our valuation fell however to $5.57. Still trading at only 59% of our valuation.

ARI announced another acquisition in November 2013. No details, but a good sign that they are really trying to accelerate their growth.

Wynnefield partners bought another 100,000 shares at $2.90 in the first week of July 2013 raising their stake to over 10%..

CTIG settled a litigation with QWEST in February 2014 and got paid $1.3 million.

Some news—finally. Fairford/Birbeck upped their non-binding offer to $.40 a share. No indication as to whether the Board will accept it or any other details. Still a low-ball offer but one which we would take after holding this for almost 8 years.

10Q filed on 11/14/2013. Not even a press release. Still trying to steal this under the cover of darkness. Revenues were $3.6 million, down from $3.9 million last year. They lost $394,000 compared to net income of $34,000 last year. Our valuation fell to $1.02 a share still more than triple the management buyout price. Cash per share fell to a measly $.02.

Birbeck and Fairford Holdings made a non-binding offer to buy CTIG in March 2013 for $.29 a share. The company formed a special committee to evaluate the offer. Hopefully they will find somebody else who will pay fair value—or at least close to it.